BlackRock has launched a suite of open-ended Emerging Market Debt (EMD) funds that integrate environmental, social and governance factors (ESG).
BlackRock says the new range of UCITS funds complements its existing EMD offering and aims to provide investors with a choice of products that may empower them in reaching their financial objectives and expressing their preferences. The funds are actively managed against a respective set of ESG benchmarks – the JESG EMD indices – launched by JP Morgan in collaboration with BlackRock in April 2018. The funds will provide investors with exposure to debt securities issued by government, public local authorities or corporates in emerging market countries.
The new suite comprises the following funds: BGF ESG Emerging Markets Bond Fund; BGF ESG Emerging Markets Local Currency Bond Fund; BGF ESG Emerging Markets Corporate Bond Fund; and BGF ESG Emerging Markets Blended Bond Fund.
Brian Deese (pictured), Head of Sustainable Investing at BlackRock, says: “These funds further demonstrate BlackRock’s commitment to innovative sustainable investment solutions, combining the best of BlackRock’s investing capabilities with insights about how ESG factors can affect long-term risk adjusted return. We are building tools that allow our portfolio managers to analyse relevant sustainability information alongside the traditional financial metrics to inform active investment decisions about where to invest.”
Sergio Trigo Paz, Head of BlackRock Emerging Market Debt, says: “It is our belief that industry leaders should develop scalable sustainable investing solutions for investors. We believe the recent launch of the ESG indexes in EM debt – a collaboration between J.P. Morgan and BlackRock – could prompt greater capital allocation to more ESG-friendly issuers over time, and there is a real opportunity to seek out enhanced returns using insightful ESG analysis, big data and text mining, as well as boots-on-the-ground engagement with issuers.”
Giulia Pellegrini, Head of EMD Sustainable Investing and Portfolio Manager in BlackRock’s Emerging Market Debt team, adds: “The gap between ESG leaders and laggards is large in the EM world, and a strong ESG data can provide forward-looking information that captures the underlying deterioration of an issuer’s creditworthiness, sometimes well before standard macro credit metrics. These funds harness our proprietary ESG scoring and other analytic tools to help build ESG-focused investment themes that take advantage of additional alpha-generating opportunities in the EMD space.”